LYNX Finance & Audit Committee...Sep 03, 2015 · Finance & Audit Committee Minutes Page . 4. of . 6. Bryant, and Lenny Antmann with a recommendation to award a contract to Cherry

LYNX Finance & Audit Committee

A G E N D A

Call to Order

Approval of Prior Meeting Minutes

Overview of FY2015 Amended Operating &

Capital Budgets

Overview of FY2016 Proposed Operating &

Capital Budgets

Overview of Health Insurance Cost Containment

Status

Other Business

Adjournment

September 3, 2015

10:00AM

LYNX Central Station

Second Floor Room #215

Finance & Audit Committee Minutes Page 1 of 6

LYNX Central Florida Regional Transportation Authority

Finance & Audit Committee Meeting Minutes

PLACE: LYNX Central Station 455 N. Garland Avenue Conference Room, 2nd. Floor Orlando, FL 32801

DATE: May 5, 2015

TIME: 09:01 AM

Members in Attendance: LYNX Staff in Attendance: Chairperson Chris McCullion, City of Orlando John Lewis, Chief Executive Officer Michael Kurek, Osceola County Blanche Sherman, Director of Finance Edward Bass, Seminole County Pat Christiansen, LYNX’ General Counsel Members Absent: Vice Chairperson Ray Walls, Orange County Lisa Buscher, FDOT 1. Cal1 to Order/Introduction

Chairperson Chris McCullion called the meeting to order at 10:00 AM.

2. Approval of Prior Meeting Minutes

Chris McCullion asked for approval of the prior meeting minutes. Motion was made and seconded to approve the Minutes of the May 5, 2015 Finance & Audit Committee. The Motion passed unanimously.

3. Audit Agenda Items

Overview of FY2016 Preliminary Capital Budget Chris McCullion called on Blanche Sherman, Director of Finance, to discuss the FY2016 preliminary capital budget. Ms. Sherman provided a brief overview of the FY2016 preliminary capital budget which is increasing overall by 4.81% over the FY2015 capital budget. The key capital budget assumptions are as follows:

Enhance LYNX facilities Construction modification to CNG bus facility

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10:00 AM


Advanced fare collection – mobile ticketing Fleet to support all service modes Continue LYMMO expansion activities Passenger Amenities Program improvements Continuation of security and surveillance Advance communications and technological capabilities

Ms. Sherman discussed the details of the FY2016 preliminary capital budget listed below:

FY2016 Preliminary Capital Budget by Category

Preliminary Amended

FY2016 FY2015 Variance

ARRA Projects ‐$ 1,804,076$ (1,804,076)$

BRT Project 14,478,987 15,674,570 (1,195,583)

Facility Improvements 5,722,519 2,922,475 2,800,044

Passenger Amenities 10,219,534 12,987,746 (2,768,212)

Security Equipment 665,044 1,010,244 (345,200)

Support Equipment 4,930,361 2,054,206 2,876,155

Technology 5,655,890 3,823,241 1,832,649

Support Vehicles 791,790 1,038,487 (246,697)

Revenue Vehicles 51,266,529 48,114,583 3,151,946

93,730,654$ 89,429,628$ 4,301,026$ Ms. Sherman then discussed the capital budget contributions and local contributions:

FY2016 Preliminary Capital Budget Contributions

Capital Contributions

FY2015

Amended

FY2016

Preliminary % Change

Federal Contributions 82,150,813$ 86,460,205$ 5.2%

State Contributions 411,879 429,256 4.2%

Local Contributions 6,666,936 6,641,193 ‐0.4%

Reserves 200,000 200,000 0.0%

Total 89,429,628$ 93,730,654$ 4.8%


FY2016 Preliminary Capital Budget – Local Contributions

Description

FY2016

Preliminary

Budget

Amount Source

*LYMMO‐ East/West 182,047$ City of Orlando

LYMMO‐ Parramore 3,637,206

City of Orlando, Orlando Utilities

Commission, Other Utilities

Capital Bus Lease 1,000,000 Local $2 Capital

Articulated CNG Buses 1,481,600 Local $2 Capital

Passenger Amenities 340,340 Wal‐Mart/Mills District/Pine Hill

Total 6,641,193$ Ms. Sherman and the Committee members discussed the following topics related to the FY2016 preliminary capital budget:

Funding sources including seeking federal funds for facility improvements and using federal funds for the CNG facilities

Discussion of how financing works for the CNG facilities Ladders of Opportunity match Walmart – Pine Hills superstop LYMMO BRT local expansion Receipt of a mobile ticketing Unsolicited Proposal

Ms. Sherman mentioned that the FY2016 preliminary capital budget will be presented to the LYNX Oversight Committee in July then the full budget will be presented to the Oversight Committee and the Board in September for adoption. Mr. John Lewis, Chief Executive Officer, discussed the media item relating to the CNG deal with Nopetro coming out of a budget hearing in Orange County. In the media, comments were made about the comparison of CNG fuel pricing to the current lower market price for diesel fuel and whether the CNG project was a waste of time. Mr. Lewis discussed the fuel hedging LYNX does for budget stability, the short term windfall for LYNX this coming year from locking in a very low fuel price, and the long term savings for LYNX as diesel prices continue to rise and CNG prices remain relatively flat. Ms. Sherman mentioned that hedging will also be used for the CNG fuel.

Recommendation to Award Contract to Cherry Bekaert LLP for Auditing Services Chris McCullion called on Blanche Sherman to present the second agenda item. Ms. Sherman discussed the Request for Proposal (RFP) process which included review of five (5) proposals by a Source Evaluation Committee (SEC) consisting of Julie Caple, Patti


Bryant, and Lenny Antmann with a recommendation to award a contract to Cherry Bekaert LLP. The group discussed that the proposal is all inclusive, the proposal amount is less than the prior year, Cherry Bekaert has been auditing LYNX for the past five years, and there is no requirement to change auditors. The Committee discussed the recommendation to the Oversight Committee. Motion was made and seconded to recommend the award of a contract to Cherry Bekaert LLP for auditing services. The Motion passed unanimously. Overview of Health Insurance Cost Containment Status

Chris McCullion called on Blanche Sherman to present the third agenda item. Ms. Sherman introduced Joshua Rubich, Area Vice President with the firm of Arthur J. Gallagher & Co., to present an overview of health insurance cost containment status. Ms. Sherman provided a chart of different scenarios of healthcare plan proposals to Committee members without the H.S.A. component. Mr. Rubich presented the following healthcare information for LYNX:

2014 plan design, premiums, and claims 2015 claims experience including a rolling twelve month report through May 2015

and a large claim (claims exceeding $25,000) summary Fully insured and self-insured options including a medical cost comparison of

Cigna’s current plan benefits to the 2016 proposed renewal plan benefits and stop loss comparisons for quotes provided by four (4) self-insured carriers including Cigna

The group discussed the competitiveness of the carriers. Ms. Sherman discussed the chart below which was given to Committee members earlier in the presentation showing the employer’s projected plan costs based on proposals from the carriers for self-insured and fully insured plans:

Description:

Employer FY2016 Projected Cost of

Plan

Difference from FY2016 Preliminary Budgeted

Healthcare Cost

FY2016 Preliminary Budgeted (26.0% Increase) fully insured 8,508,987$ -$ Cigna Proposed Policy (33.14% Increase) fully insured 8,881,356$ 372,369$ Cigna 12-12 (16.1% Increase) self-insured 7,992,678$ (516,310)$ Cigna 12-15 (25.0% Increase) self-insured 8,456,835$ (52,153)$ SunLife 12-12 (16.5% Increase) self-insured 7,995,285$ (513,702)$ SunLife 12-15 (26.8% Increase) self- insured 8,550,709$ 41,722$ AIG 12-12 (18.8% Increase) self-insured 8,133,489$ (375,498)$ AIG 12-15 (31.6% Increase) self-insured 8,801,041$ 292,054$ Voya 12-12 (18% Increase) self-insured 8,091,767$ (417,220)$ Voya 12-15 (34% Increase) self-insured 8,926,207$ 417,220$


Mr. Rubich discussed the next steps which include: Continuing to monitor claims to see if the 2015 year-to-date experience continues to

run better than 2014 Negotiating with Cigna on fully insured and self-insured proposals and stop loss

carriers on self-insured proposals including reviewing different specific deductible and aggregate corridor amounts

Conducting a risk/reward analysis to determine the self-insured vs. fully insured decision once the best and final numbers are negotiated

Topics discussed by the group during the presentation included:

Looking at an additional month of claims experience Impact of large claims Looking at ongoing claimants for catastrophic claims whether acute or getting better Fully insured and self- insured options How much does the fully insured carrier want to invest in a lower rate? Drop dead date for making a decision if want to go to self-funding Timing of implementation for the calendar year Cigna continuing to provide the network with perhaps a different stop loss provider if

go self-insured Level to fund based on prior year claims (expected claims) Building reserves if a change is made Importance of the decision as healthcare is the second highest line item

Mr. McCullion and Mr. Edward Bass complimented Ms. Sherman on the information being provided to the Committee and the good job being done by her and her staff regarding health care cost containment. Mr. McCullion summarized the information as indicating that there is not a huge benefit going self-insured based on the stop loss coverage analysis and the Cigna claims staying the same or trending better. Mr. Rubich spoke about LYNX not being able to make a determination now that 2015 will trend better than 2014 or that 2014 was a “bad” year. Ms. Sherman spoke about waiting for Cigna’s best and final offer. Ms. Sherman discussed a request going to the Board in July to expedite a claims audit for August. Ms. Sherman spoke about the objective of the claims audit in negotiating the stop loss coverage, helping to contain costs, and providing a better understanding of the claims to use in making a decision. An update to the Committee will be provided in August when more information is available. Review of LYNX’ Unsolicited Proposals (UP) Policy (Admin Rule 4.18) and

Clarification Policy Supplemental


Chris McCullion called on Blanche Sherman to present the last agenda item. Ms. Sherman introduced Pat Christiansen, LYNX’ General Counsel, to give some background on the Unsolicited Proposal (UP) Policy. Mr. Christiansen discussed the adoption of a policy brought about so LYNX would have definitive guidelines to deal with two (2) pending Unsolicited Proposals. This policy was not available when the Compressed Natural Gas (CNG) UP was received last year. The purpose of the policy is to codify what a UP is, how it is dealt with, the kinds of fees to be paid, and how LYNX deals with the cone of silence. Ms. Sherman stated that she wanted the Committee members to review the policy and letter of clarification for any recommendations or input on the policy as it exists today. Notification of the two UPs (mobile ticketing and Osceola/Seminole facilities) will go to the Board in July. Ms. Susan Black, General Manager, discussed the policy, the standard operating procedures, the differences between the two UPs, and that the process will take some months to go through. Once LYNX goes through the process with these two UPs then LYNX will know exactly what is needed and recommendations of changes to the Administrative Rule can be brought to the Board. The group discussed the clarification letter, being able to look at what is working or what is not working during the process, and the fee calculated to deter non serious proposals and sales pitches. Other Business Chris McCullion asked if there was any other business. Mr. Christiansen discussed the financing documents received from Nopetro in June which show bond offerings to be issued through a Wisconsin agency involving the Nopetro Jacksonville, Tallahassee, and Orlando facilities. Provisions in the fuel purchase agreement call for LYNX to review and approve the financing. Mr. Christiansen spoke about some of the reasons LYNX may or may not want to approve this type of financing and the need for further review of all the documents. LYNX has engaged a financial advisor to look at the financing. Mr. Christiansen spoke about wanting to make the Committee members aware of some issues that need to be worked through and mentioned that LYNX has payment and performance bonds as protection. Mr. Christiansen stated that Nopetro is willing to work with LYNX on these issues. Ms. Sherman commented on talks that will be held over the next two to three weeks to continue the review of the Nopetro financing. The meeting was adjourned at 11:45 AM.

LYNX Finance & Audit Committee Agenda

Action Agenda Item #1

To: LYNX Finance & Audit Committee Members

From: Blanche W. Sherman, Director of Finance Julie Caple, Technical Contact

Phone: 407.841.2279 extension 6100

Item Name: Amendment to LYNX’ FY2015 Operating and Capital Budgets

Date: 09/03/15 OVERVIEW: The FY2015 Amended Operating and Capital Budgets totals $216,784,407. The amended Operating Budget will increase from $126,576,707 to $127,354,779. The FY2015 Amended Capital Budget will remain $89,429,628. BACKGROUND: The table below and corresponding bullets provide detailed information on the items comprising the operating budget amendment request:

Revenue

FY2015

Amended

Budget as of

March 2015

Professional

Fees ‐

Workers'

Compensation

Purchased

Transportation ‐

MV US 192 BRT

Salaries,

Wages &

Fringe

Reclassifications

/ Transfers

FY2015

Amended

Budget as of

September

2015

Fund Balance 1,665,286$ ‐$ ‐$ ‐$ ‐$ 1,665,286$ LYNX‐Generated Revenue 38,446,206 ‐ ‐ ‐ ‐ 38,446,206 Federal Revenue 15,875,297 196,535 105,000 ‐ 336,537 16,513,369 State Revenue 13,263,175 ‐ ‐ ‐ 140,000 13,403,175 Local Revenue 57,326,743 65,000 254,938 ‐ ‐ (319,938) 57,326,743

Total Revenue 126,576,707$ 65,000$ 451,473$ 105,000$ ‐$ 156,599$ 127,354,779$

Expense

Salaries/Wages/Fringes 70,796,959$ ‐$ ‐$ 25,646$ ‐$ 70,822,605$ Other Services 11,138,951 65,000 ‐ 105,000 (25,646) 156,599 11,439,904 Fuel 16,108,610 ‐ ‐ ‐ ‐ 16,108,610 Materials & Supplies 7,411,652 ‐ ‐ ‐ ‐ 7,411,652 Utilities 1,439,337 ‐ ‐ ‐ ‐ 1,439,337 Casualty & Liability 1,399,850 ‐ ‐ ‐ ‐ 1,399,850 Taxes & Tags 409,841 ‐ ‐ ‐ ‐ 409,841 Purchased Transportation 16,929,333 451,473 ‐ ‐ ‐ 17,380,806 Miscellaneous 676,674 ‐ ‐ ‐ ‐ 676,674 Interest & Leases 265,500 ‐ ‐ ‐ ‐ 265,500

Total Operating Expenses 126,576,707$ 65,000$ 451,473$ 105,000$ ‐$ 156,599$ 127,354,779$

LYNX Finance & Audit Committee Agenda Professional Fees - Workers’ Compensation – At the March 26, 2015 Board Meeting, the Board approved an amendment to Contract #13-A62 with CorVel Corporation to extend the scope of services to Third Party Administration services to include general liability and to extend the contract term to July 31, 2016. LYNX staff amended the FY2015 Amended Operating Budget by $65,000 to cover the additional services and contract extension. Purchased Transportation - At the March 26, 2015 Board Meeting, the Board approved an increase of $451,473 to MV Transportation Contract #12-C02 for additional fixed capital costs associated with the increase in peak vehicles required to meet service demand and for the repair of 24 Mobile Data Terminals (MDTs) and installation kits. This contract contains service assumptions based on paratransit service demand established in prior years. Actual paratransit service demand has been greater than anticipated for each of the contract years resulting in an increase in contractor vehicles required to meet the service. US 192 BRT - At the July 23, 2015 Board Meeting, the Board approved an increase of $105,000 in the contracts for General Transportation Planning and Consulting Services for additional financial and phasing analysis for the US 192 BRT. Salaries, Wages and Fringe – $25,646 for State of Florida Financial Services Assessments are being reclassed from Professional Fees – Workers’ Compensation to Workers’ Compensation Insurance. Reclassification/Transfers – The net impact is $156,599. This is due to federal funding for the tires and tube lease being understated and engines and transmissions being overstated. In addition, expenses for legal, Veterans Transportation and Community Living Initiative, and landscaping are being relcassed. The following table summarizes the adjustments mentioned above and formally amends the FY2015 Amended Operating Budget from $126,576,707 to $127,354,779 as follows:

FY2015 Amended Operating Budget

Operating Revenues

FY2015 Amended Budget as of March 2015 Revisions

FY2015 Amended Budget as of

September 2015

Fund Balance 1,665,286$ -$ 1,665,286$ LYNX-Generated Revenue 38,446,206 - 38,446,206 Federal Revenue 15,875,297 638,072 16,513,369 State Revenue 13,263,175 140,000 13,403,175 Local Revenue 57,326,743 - 57,326,743 Total Revenue 126,576,707$ 778,072$ 127,354,779$

LYNX Finance & Audit Committee Agenda These funds are programmed to fund the following types of expenses:

Operating Expenses

FY2015 Amended Budget as of March 2015 Revisions

FY2015 Amended Budget as of

September 2015

Salaries/Wages/Fringes 70,796,959$ 25,646$ 70,822,605$ Other Services 11,138,951 300,953 11,439,904 Fuel 16,108,610 - 16,108,610 Materials & Supplies 7,411,652 - 7,411,652 Utilities 1,439,337 - 1,439,337 Casualty & Liability 1,399,850 - 1,399,850 Taxes & Tags 409,841 - 409,841 Purchased Transportation 16,929,333 451,473 17,380,806 Miscellaneous 676,674 - 676,674 Interest & Leases 265,500 - 265,500 Total Operating Expenses 126,576,707$ 778,072$ 127,354,779$

The following table reflects adjustments related to FY2015 Amended Capital Budget as follows:

FY2015 Amended Capital Budget


FY2015 Amended

Budget as of March 2015 Reclassifications

FY2015 Amended

Budget as of September 2015

Federal Contributions 82,150,813$ -$ 82,150,813$ State Contributions 411,879 - 411,879 Local Contributions 6,666,936 - 6,666,936 Reserves 200,000 - 200,000 Total 89,429,628$ -$ 89,429,628$

LYNX Finance & Audit Committee Agenda These funds are programmed to fund the following types of expenditures:

FY2015 FY2015Amended Amended

as of Real Time Kissimmee as of Capital Expenditures March 2015 Information Intermidal Vehicles September 2015Revenue Vehicles 49,153,072$ -$ -$ 100,646$ 49,253,718$ BRT 15,674,570 - - - 15,674,570 Facilities 2,922,475 - (1,192) - 2,921,283 Passenger Amenities 12,987,746 (3,300,000) 1,192 - 9,688,938 Technology 3,823,241 3,300,000 - - 7,123,241 Security 1,010,244 - - - 1,010,244 Support Equipment 2,054,205 - - (100,646) 1,953,559 ARRA 1,804,075 - - - 1,804,075 Total 89,429,628$ -$ -$ -$ 89,429,628$

Reclassifications

• Reclassification of Real Time Information from Passenger Amenities to Technology • Reclassification of Service Vehicles from Support Equipment to Vehicles • Reclassification of Kissimmee Intermodal Purchase Order balance from Facilities to Passenger

Amenities. CONCLUSION The FY2015 Amended Operating Budget will be presented to the Board of Directors for final consideration and approval at the September 11, 2015 Board Meeting.

FY2015 Amended Operating & Capital

BudgetsPresented to the

LYNX Finance & Audit Committeeby Blanche W. Sherman, CPA

Director of FinanceSeptember 3, 2015

FY2015 Operating Budget Overview

FY2015 Amended

Budget as of March 2015

FY2015 Amended

Budget as of September 2015 % Change

Operating Revenue 126,576,707$ 127,354,779$ 0.6%

Operating Expenses 126,576,707 127,354,779 0.6%

Operating Income/(Deficit) -$ -$ 0.0%

Key Operating Budget Amendment Basis

• Professional Fees – Workers’ Compensation ‐ extension toscope of service and contract.

• MV Transportation, Inc. ‐ contract modification foradjustment to productivity goals and increased capital costs.

• US 192 BRT ‐ financial and phasing analysis

• Salaries, Wages and Fringe ‐ Workers CompensationInsurance reclassification

• Reclassifications/Transfers for TD funds, tires & tubes lease,engines & transmissions, landscaping and legal fees

FY2015 Operating Revenue

Operating Revenues

FY2015 Amended


FY2015 Amended


% Change

Fund Balance 1,665,286$ 1,665,286$ 0.0%Customer Fares 29,530,910 29,530,910 0.0%Contract Services 6,593,296 6,593,296 0.0%Advertising on Buses 1,875,000 1,875,000 0.0%Advertising - Trade 30,000 30,000 0.0%Interest & Other Income 417,000 417,000 0.0%Federal Revenue 15,875,297 16,513,369 4.0%State Revenue 13,263,175 13,403,175 1.1%Local Revenue 57,326,743 57,326,743 0.0%Total Revenue 126,576,707$ 127,354,779$ 0.6%

FY2015 Operating Expenses

Operating Expenses

FY2015 Amended


FY2015 Amended


% Change

Salaries/Wages/Fringes 70,796,959$ 70,822,605$ 0.0%Other Services 11,138,951 11,439,904 2.7%Fuel 16,108,610 16,108,610 0.0%Materials & Supplies 7,411,652 7,411,652 0.0%Utilities 1,439,337 1,439,337 0.0%Casualty & Liability 1,399,850 1,399,850 0.0%Taxes & Tags 409,841 409,841 0.0%Purchased Transportation 16,929,333 17,380,806 2.7%Miscellaneous 676,674 676,674 0.0%Interest & Leases 265,500 265,500 0.0%Total Operating Expenses 126,576,707$ 127,354,779$ 0.6%

Key Capital Budget Amendment Reclassifications

• Reclassification of Real Time Information fromPassenger Amenities to Technology

• Reclassification of Service Vehicles from SupportEquipment to Vehicles

• Reclassification of Kissimmee Intermodal PurchaseOrder Balance from Facilities to PassengerAmenities

FY2015 Capital Budget Overview

FY2015

Amended

Budget as of

March 2015

FY2015

Amended

Budget as of

September 2015 % Change

Capital Contributions 89,429,628$ 89,429,628$ 0.00%

Capital Expenditures 89,429,628 89,429,628 0.00%

Capital Gains/(Losses) ‐$ ‐$ N/A

FY2015 Capital Budget Contributions


FY2015

Amended

Budget as of

March 2015 Reclassifications

FY2015

Amended

Budget as of

September 2015

Federal Contributions 82,150,813$ ‐$ 82,150,813$

State Contributions 411,879 ‐ 411,879

Local Contributions 6,666,936 ‐ 6,666,936

Reserves 200,000 ‐ 200,000

Total 89,429,628$ ‐$ 89,429,628$

FY2015 Capital Expenditures

Capital Expenditures

FY2015

Amended

Budget as of

March 2015

Reclassifications

FY2015

Amended

Budget as of

September 2015

Revenue Vehicles 49,153,070$ 100,646$ 49,253,716$

BRT 15,674,570 ‐ 15,674,570

Facilities 2,922,475 (1,192) 2,921,283

Passenger Amenities/Related 12,987,746 (3,298,808) 9,688,938

Technology 3,823,241 3,300,000 7,123,241

Security 1,010,244 ‐ 1,010,244

Support Equipment 2,054,206 (100,646) 1,953,560

ARRA 1,804,076 ‐ 1,804,076

Total 89,429,628$ ‐$ 89,429,628$

Board Action RequestedLYNX staff is asking for approval of the amendedFY2015 operating and capital budgets.

FY2015

Amended

Budget as of

March 2015

FY2015

Amended

Budget as of

September 2015

%

Change

Operating 126,576,707$ 127,354,779$ 0.6%

Capital 89,429,628 89,429,628 0.0%

Total 216,006,335$ 216,784,407$ 0.4%


Agenda Item #2




Item Name: Overview of the Fiscal Year 2016 Operating and Capital Budgets

Date: 09/03/15 At the March 26, 2015 Board meeting, staff presented the preliminary FY2016 Operating Budget in the amount of $126,493,478 to the Board of Directors. Since then, presentations have been made and/or information has been provided to Orange, Osceola, and Seminole counties, assumptions have been reexamined and the cost of providing service for next fiscal year has been discussed, which has increased the FY2016 Operating Budget by 0.4 percent. Final approval from the funding partners regarding their proposed funding levels of service is needed. If the final approved funding levels are different than expected, we will adjust our budget accordingly. OVERVIEW: Budget Highlights The FY2016 proposed budget totals $221,589,243, of which $127,045,044 represents operating expenses and $94,543,799 represents capital expenditures. This is a net increase in the total budget of $4,804,836 or 2.2% from the FY2015 Amended Budget. Operating Budget The proposed Operating Budget for FY2016 is $127,045,044, which is a decrease of $309,335 or 0.2% from the FY2015 Amended Operating Budget.

The Operating Budget is funded by a combination of LYNX-generated revenue and federal, state, and local dollars. These funds are used to fund personnel, services, materials, supplies, taxes, utilities, casualty & liability, purchased transportation, leases and miscellaneous expenses.


Specifically, this budget includes funds from the following sources:

Operating Revenues

FY2015 Amended

Budget

FY2016 Proposed Budget

Dollar Change Amount

% Change

Fund Balance * 1,665,286$ 571,571$ (1,093,715)$ -66%Customer Fares 29,530,910 29,451,480 (79,430) -0.3%Contract Services 6,593,296 5,398,265 (1,195,031) -18.1%Advertising on Buses 1,875,000 2,050,000 175,000 9.3%Advertising - Trade 30,000 30,000 - 0.0%Interest & Other Income 417,000 462,853 45,853 11.0%Federal Revenue 16,513,369 16,087,336 (426,033) -2.6%State Revenue 13,403,175 14,103,842 700,667 5.2%Local Revenue 57,326,743 58,890,097 1,563,354 2.7%Total Revenue 127,354,779$ 127,045,444$ (309,335)$ -0.2%

*Use of prepaid funding from Orange County, Osceola County, and City of Orlando for new Service Development routes.

The funds are programmed to fund the following types of expenses:

Operating Expenses

FY2015 Amended

Budget



% Change

Salaries/Wages/Fringes 70,822,605$ 73,270,554$ 2,447,949$ 3.5%Other Services 11,439,904 10,861,200 (578,704) -5.1%Fuel 16,108,610 13,569,071 (2,539,539) -15.8%Materials & Supplies 7,411,652 8,284,043 872,391 11.8%Utilities 1,439,337 1,454,571 15,234 1.1%Casualty & Liability 1,399,850 1,524,850 125,000 8.9%Taxes & Tags 409,841 434,605 24,764 6.0%Purchased Transportation 17,380,806 16,334,771 (1,046,035) -6.0%Miscellaneous 676,674 826,779 150,105 22.2%Interest & Leases 265,500 485,000 219,500 82.7%Total Operating Expenses 127,354,779$ 127,045,444$ (309,335)$ -0.2%

Capital Budget The proposed Capital Budget for FY2016 is $94,543,799, which is an increase of $5,114,170 or approximately 5.7% more than the FY2015 Amended Capital Budget. The increase in the capital budget from the FY2015 Amended Capital Budget results from the planned construction modifications to the CNG bus facility, CNG replacement buses, and the upgrade to mobile ticketing.


The capital budget is funded from a combination of federal, state and local sources, and includes items such as the planned purchase of replacement buses and vans, bus shelters, and the use of technology to assist in service delivery and improvements. The majority of the capital budget, 92.35% is funded through federal grants, .45% is funded through state grants, and the remaining 7.2% through local funds and reserves. The local contribution from the funding partners covers the capital bus lease, ten (10) articulated buses and LYMMO BRT expansion projects. In addition, private funding through LYNX negotiated agreements contribute to passenger shelter costs. Specifically, this budget includes funds from the following areas:

FY2015 FY2016Amended Proposed

Capital Contributions Budget Budget % Change

Federal Contributions 82,150,813$ 87,313,091$ 6.3%State Contributions 411,879 429,256 4.2%Local Contributions 6,666,936 6,601,452 -1.0%Reserves 200,000 200,000 0.0%

Total 89,429,628$ 94,543,799$ 5.7%

The funds are programmed to fund the following types of capital expenditures:

FY2015 FY2016Amended Proposed Dollar Amount %

Description Budget Budget Change Change

ARRA 1,804,075$ -$ (1,804,075)$ -100.0%BRT 15,674,570 14,070,635 (1,603,935) -10.2%Facilities 2,921,283 5,776,330 2,855,047 97.7%Passenger Amenities 9,688,938 10,064,773 375,835 3.9%Security 1,010,244 603,995 (406,249) -40.2%Support Equipment 1,953,559 4,845,270 2,891,711 148.0%Technology 7,123,241 5,578,366 (1,544,875) -21.7%Support Vehicles 1,139,133 702,655 (436,478) -38.3%Revenue Vehicles 48,114,585 52,901,775 4,787,190 9.9%

Total 89,429,628$ 94,543,799$ 5,114,171$ 5.7%

Notes:

1) Vehicles include expansion and replacement vehicles for fixed-route, vanpool, and paratransit services and support vehicles.


2) BRT includes the Orange, Lime, and Grapefruit LYMMO line capital activities, as well as, the FlexBus project.

3) Facilities include funds for LCS, LOC, Osceola, LB McLeod improvements and CNG facility modifications.

4) Passenger amenities include shelters, transfer centers, solar power, benches, and trash receptacles.

5) Technology includes items to improve communication and information delivery such as network improvements, servers, software upgrades and real time information.

6) Security includes equipment to enhance security and surveillance. 7) Support equipment includes items such as mobile ticketing, fare payment on board validators,

copiers, printers, shop tools, furniture, and storage cabinets.

CONCLUSION: The FY2016 Operating and Capital Budgets will be presented to the Board of Directors’ for final consideration and approval at the September 11, 2015 Board Meeting.

FY2016 Proposed Operating & Capital

BudgetsPresented to the

LYNX Finance & Audit Committeeby Blanche W. Sherman, CPA

Director of FinanceSeptember 3, 2015

Key Budget Assumptions - Overall

• FY2016 Funding based on LYNX adopted FundingModel

• Maximize current service levels through efficiencies

• Apply additional Flex (NeighborLink) services, whereappropriate

Key Budget Assumptions - Revenue

• Maintain current Preventative Maintenance FundingLevel

• Maximize use of Anticipated Advertising Revenue

• Potential Royalties from third party usage ofCompressed Natural Gas (CNG)

Key Budget Assumptions - Expenses• Continuation of Fuel Hedging Program, as appropriate

• Impacts of conversion to Compressed Natural Gas (CNG)

• Continued application of reductions based on LYNX ownership of paratransit vehicles

• Continuation of Bio‐diesel Program, as appropriate

• Evaluate LYNX’ current Health Insurance Program for consideration of becoming self insured.

• Osceola County Service Improvements (Link 10 & Link 26)

Pending Items

• Implementation of Funding Partner approved COA Recommendations

• Impacts of SunRail Phase 2 expansion

FY2016 Operating Budget Overview

FY2015 Amended FY2016 Proposed % Change

Operating Revenue 127,354,779$ 127,045,444$ ‐0.2%

Operating Expenses 127,354,779 127,045,444 ‐0.2%

Operating Income/(Deficit) ‐$ ‐$ N/A

FY2016 Operating Revenue

Operating Revenues

FY2015 Amended

Budget



% Change

Fund Balance* 1,665,286$ 571,571$ (1,093,715)$ -66%Customer Fares 29,530,910 29,451,480 (79,430) -0.3%Contract Services 6,593,296 5,398,265 (1,195,031) -18.1%Advertising on Buses 1,875,000 2,050,000 175,000 9.3%Advertising - Trade 30,000 30,000 - 0.0%Interest & Other Income 417,000 462,853 45,853 11.0%Federal Revenue 16,513,369 16,087,336 (426,033) -2.6%State Revenue 13,403,175 14,103,842 700,667 5.2%Local Revenue 57,326,743 58,890,097 1,563,354 2.7%Total Revenue 127,354,779$ 127,045,444$ (309,335)$ -0.2%

* Includes carry-over contingency and prepaid funding

FY2016 Operating Expenses

Operating Expenses

FY2015 Amended

Budget



% Change

Salaries/Wages/Fringes 70,822,605$ 73,270,554$ 2,447,949$ 3.5%Other Services 11,439,904 10,861,200 (578,704) -5.1%Fuel 16,108,610 13,569,071 (2,539,539) -15.8%Materials & Supplies 7,411,652 8,284,043 872,391 11.8%Utilities 1,439,337 1,454,571 15,234 1.1%Casualty & Liability 1,399,850 1,524,850 125,000 8.9%Taxes & Tags 409,841 434,605 24,764 6.0%Purchased Transportation 17,380,806 16,334,771 (1,046,035) -6.0%Miscellaneous 676,674 826,779 150,105 22.2%Interest & Leases 265,500 485,000 219,500 82.7%Total Operating Expenses 127,354,779$ 127,045,444$ (309,335)$ -0.2%

FY2016 Local Revenue by JurisdictionFY2015 Proposed Net Percentag

Amended Regional Model Increase Increase

Budget Need for (Decrease) (Decrease)

Operating Funding

Orange County 40,321,585$ 39,701,511$ (620,074)$ ‐1.5%

Osceola County 5,479,172 6,393,683 914,511 16.7%

Seminole County 6,249,068 6,175,067 (74,001) ‐1.2%

City of Orlando 3,895,598 4,046,660 151,062 3.9%

City of Orlando ‐ LYMMO 2,060,215 2,305,411 245,196 11.9%

Subtotal 58,005,638$ 58,622,332$ 616,694$ 1.1%

St. Cloud 161,999$ ‐$ (161,999)$ ‐100.0%

Altamonte Springs 120,900 120,900 ‐ 0.0%

Sanford 93,000 93,000 ‐ 0.0%

Lake County 242,180 259,990 17,810 7.4%

Subtotal 618,079$ 473,890$ (144,189)$ ‐23.3%

Subtotal Operating Funding 58,623,717$ 59,096,222$ 472,505$ 0.8%


Orange County 1,687,947$ 1,701,304$ 13,357$ 0.8%

Osceola County 193,753 203,270 9,517 4.9%

Seminole County 216,984 214,016 (2,968) ‐1.4%

Subtotal 2,098,684$ 2,118,590$ 19,906$ 0.9%

Total Local Funds 60,722,401$ 61,214,812$ 492,411$ 0.8%

Key Capital Budget Assumptions• Enhance LYNX facilities

• Construction Modification to CNG Bus Facility

• Advanced Fare Collection – Mobile Ticketing

• Fleet to support all service modes

• Continue LYMMO expansion activities

• Passenger Amenities Program improvements

• Continuation of security and surveillance

• Advance communications and technological capabilities

FY2016 Capital Budget Overview

FY2015

Amended

Budget

FY2016

Proposed

Budget % Change

Capital Contributions 89,429,628$ 94,543,799$ 5.7%

Capital Expenditures 89,429,628 94,543,799 5.7%

Capital Gains/(Losses) ‐$ ‐$ N/A

FY2016 Capital Budget Contributions

FY2015 FY2016

Amended Proposed

Capital Contributions Budget Budget % Change

Federal Contributions 82,150,813$ 87,313,091$ 6.3%

State Contributions 411,879 429,256 4.2%

Local Contributions 6,666,936 6,601,452 ‐1.0%

Reserves 200,000 200,000 0.0%

Total 89,429,628$ 94,543,799$ 5.7%

FY2016 Budget SummaryFY2015 FY2016

Amended Proposed Change

Operating Revenue 127,354,779$ 127,045,444$ -0.2%Operating Expenses 127,354,779 127,045,444 -0.2%Operating Income/(Deficit) -$ -$ N/A

Capital Funding 89,429,628$ 94,543,799$ 5.7%Capital Expenditures 89,429,628 94,543,799 5.7%Capital Income/(Deficit) -$ -$ N/A

Total Sources of Funding 216,784,407$ 221,589,243$ 2.2%Total Uses of Funding 216,784,407 221,589,243 2.2%

Net Financial Position -$ -$ N/A

Staffing Count 1,106 1,115 9

Future Items

• Consideration of Public/Private Partnership (P3) (satellite facilities/BRT)

• Continue to review the type of fixed route vehicles used in future operations

• Seek State grant funding opportunities for capital projects

Operating Budget Calendar

Final Board Action September 11

Budget Year 15– 16 Commences October 1


Agenda Item #3




Item Name: Overview of Health Insurance Status

Date: 09/03/15 At the July 15, 2015 Finance and Audit Committee meeting, LYNX staff provided a brief recap of LYNX’ five-year health insurance history and an update on the ongoing review of health insurance. At the time of that meeting, the table below summarized the preliminary costs to LYNX for health insurance premiums from Cigna, the current provider, and three optional providers, AIG, SunLife, and Voya for self-insured options.

Description:

Employer FY2016 Projected Cost of

Plan

Difference from FY2016 Preliminary Budget

Healthcare CostFY2016 Preliminary Budgeted (26.0% Increase) - Fully-insured 8,508,987$ -$ Cigna Proposed Policy (33.14% Increase) - Fully-insured 8,881,356$ 372,369$ Cigna 12-12 (16.1% Increase) - Self-insured 7,992,678$ (516,310)$ Cigna 12-15 (25.0% Increase) - Self-insured 8,456,835$ (52,153)$ SunLife 12-12 (16.5% Increase) - Self-insured 7,995,285$ (513,702)$ SunLife 12-15 (26.8% Increase) - Self-insured 8,550,709$ 41,722$ AIG 12-12 (18.8% Increase) - Self-insured 8,133,489$ (375,498)$ AIG 12-15 (31.6% Increase) - Self-insured 8,801,041$ 292,054$ Voya 12-12 (18% Increase) - Self-insured 8,091,767$ (417,220)$ Voya 12-15 (34% Increase) - Self-insured 8,926,207$ 417,220$

Healthcare Plan Proposal without H.S.A. Component Summary - July 2015

Since the July Finance and Audit Committee meeting, staff continued to work with the Broker and received updated proposals from Cigna, SunLife, and AIG. Voya did not rebid. Cigna provided an updated proposal for a best and final offer for the current LYNX plan that represents an increase in rates of 24.53% over the current FY2015 rates, and a decrease in rates of 1.47% from those included in the FY2016 Preliminary Operating Budget. In addition, the three other vendors also revised their proposals for self-insured. The LYNX share of the annual plan costs and the difference of the plan costs for each provider compared to the FY2016 Proposed Operating Budget total for healthcare are also shown below. The health savings account share of the plan will remain constant and therefore is not included in the costs identified in the chart below.


Description:Employer Cost of

Plan

Difference from FY2016 Proposed

Budgeted Healthcare Cost

FY16 Preliminary Budgeted (26.0% Increase) - Fully-insured 8,540,470$ -$ Cigna Proposed Policy (24.53% Increase) - Fully-insured 8,463,438$ (77,031)$ Cigna 12-12 (5.4% Increase) - Self-insured 7,460,981$ (1,079,489)$ Cigna 12-36 (12.3% Increase) - Self-insured 7,822,558$ (717,912)$ Cigna 12-36 (17.6% Increase) - Gallagher Projection Self-insured 8,100,290$ (440,180)$ SunLife 12-12 (12.8% Increase) - Self-insured 7,848,759$ (691,711)$ SunLife 12-15 (23.21% Increase) - Self-insured 8,394,267$ (146,203)$ AIG 12-12 (13.9% Increase) - Self-insured 7,906,401$ (634,069)$ AIG 12-15 (26.4% Increase) - Self-insured 8,561,431$ 20,961$

Healthcare Plan Proposal without H.S.A. Component Summary - September 2015

Based on the offers received, LYNX staff believes that the most viable option for health insurance coverage for FY2016 would be the Cigna 12-36 self-insured offer or the Gallagher projection for Cigna self-insured 12-36, which represents a decrease over the FY2016 Proposed Operating Budget by $717,912 and 440,180, respectively. LYNX staff believes modifying the health insurance to self-insured will provide long-term financial benefits and would also allow for plan stability over continuing with a fully-insured plan. LYNX staff proposes migrating to the Cigna 12-36 Health Plan Option for the FY2016 budget year for Finance and Audit Committee consideration. Transitioning to self-insured would require LYNX to undertake several key steps as detailed below.

1. 112.08 Filing - Florida Statue requires that a self funded plan offered by a public entity maintain surplus assets equal to at least 60 days of claims either as assets in the plan or in the form of unencumbered surplus elsewhere in the organization to pay claims. These funds are in addition to the run out liability. The entity is required to submit an annual filing documenting that it has sufficient surplus. The initial filing needs to be completed in advance of the effective date of the plan, and Gallagher’s actuaries will complete this on a timely basis. The funds do not need to be moved to a separate bank account, but must be available in the event the plan becomes insolvent. The 60-day target equates to approximately $1.6 million dollars.

If 60 days of funds are not available LYNX would file the initial report showing the available funds and write a plan on how the remaining funds will be captured throughout the year. The Office of Insurance Regulation (OIR) will have the discretion on whether or not to accept this method. This method estimates the total annual expected costs of approximately $9.4 million per Cigna or $10 million per Gallagher for the self insured plan. The best and final fully-insured plan is estimated at $10.7 million with a delta that would allow for the surplus requirement to be captured.


2. Banking Setup - Once LYNX has submitted the appropriate paperwork to the State and it has been accepted by the OIR, the banking setup would be completed as follows:

a. An imprest balance would be provided in advance to have funds in place to pay for claims. The balance is recommended to be funded on a weekly basis. Claims are pulled on a daily basis. There is also an option to not have an imprest balance; however, this would require daily funding on LYNX’ part and may be administratively burdensome. The imprest amount would be set with Cigna’s underwriters.

b. LYNX has the option to decide whether or not the funds would be transferred by LYNX or by the vendor banks (either Citibank or JP Morgan Chase). Also, Gallagher is reviewing whether another bank can be used if the bank vendor solution is chosen.

3. Claims Reconciliation - As part of the banking component, LYNX will want to reconcile the claims against what was actually deducted. Cigna will provide weekly backup, as well as, monthly banking reports to assist in this reconciliation. 4. Health Insurance Portability and Accountability Act (HIPAA) Privacy Policy - LYNX will need to create a HIPAA Policy since the self-insured plan would provide access to private health information. Gallagher is available to assist LYNX with policy creation. 5. Administrative Only Agreement (ASO) Contract - Cigna will provide an ASO and Stop Loss Contract for review and execution prior to payment of claims. 6. Plan Document Creation - LYNX will create an overall plan document for the transition to self-insured that outlines all eligibility, claims, appeals, etc. The most significant step of the transition would be setting up the banking vendor to allow funding of the self-insurance account if the bank vendor option is chosen. LYNX would also need to determine the funding frequency, initiation, and method to move forward with self-insurance.

2016 Health Insurance

Renewal

JOSHUA RUBICH, AREA VICE PRESIDENT SEPTEMBER 3, 2015

ARTHUR J. GALLAGHER & CO. | BUSINESS WITHOUT BARRIERS™

Agenda

2015 Executive Summary

Claims Experience

Fully Insured Renewal

Self Insured Proposals

Observations/Next Steps

Considerations

Steps to Moving to Self Insurance

© 2014 GALLAGHER BENEFIT SERVICES, INC. 2



Fully Insured

• Initial renewal of approximately

33% (claims January 2014 – May

2015)

• Final renewal of 24.5% based

upon additional claims data

(August 2014 – July 2015) and

final negotiations

• Premium vs. claims reduced from

110.9% to 107.4%

Self Insured

• Multiple stop loss options provided with Cigna being the most competitive based upon terms and conditions

• Lower administrative fees are yielding a lower than expected renewal for the self insured options compared to fully insured

• If claims continue on their current path, this option could be viable




• Claims

– Large claims continue to have a significant impact on LYNX

• Number of catastrophic claimants are almost double the norm

– 2014 claims

• Increased 23.4 % PMPY over 2013

• Increased 22.3% PMPY (July 2014-June 2015 vs July 2013-June

2014)

– 2014 claims excluding catastrophic claims (over $50k)

• Increased 7.6% PMPY over 2013

• Increased .6% PMPY (July 2014-June 2015 vs July 2013-June 2014)



2015 CLAIMS EXPERIENCE


Year /

MonthCapitation In-Network

Out-of-

NetworkPharmacy

Total

Claims

Billed

Premium

Pooled

Premium

Total

Premium

Premium

vs. ClaimsSubs Members

Claims

PEPM

Aug-2014 $21,081 $562,964 ($1,104) $185,232 $768,173 $678,316 $46,937 $725,252 105.9% 950 1,497 $809

Sep-2014 $20,797 $635,041 $6,020 $114,438 $776,296 $676,105 $46,742 $722,847 107.4% 948 1,485 $819

Oct-2014 $25,009 $765,527 $34,767 $105,989 $931,291 $668,792 $46,277 $715,068 130.2% 941 1,468 $990

Nov-2014 $21,442 $795,052 $2,548 $135,381 $954,422 $667,888 $46,168 $714,056 133.7% 940 1,471 $1,015

Dec-2014 $22,215 $794,134 $1,363 $211,368 $1,029,079 $666,729 $46,125 $712,853 144.4% 943 1,470 $1,091

Jan-2015 $25,296 $778,057 $1,551 $84,707 $889,612 $658,414 $45,242 $703,656 126.4% 948 1,451 $938

Feb-2015 $19,282 $334,294 $11,196 $104,837 $469,610 $656,900 $45,138 $702,038 66.9% 947 1,451 $496

Mar-2015 $19,718 $483,759 $1,408 $134,393 $639,277 $666,075 $45,768 $711,843 89.8% 961 1,469 $665

Apr-2015 $23,895 $718,488 $969 $148,455 $891,808 $666,265 $45,782 $712,047 125.2% 961 1,468 $928

May-2015 $19,661 $517,481 $5,473 $127,164 $669,780 $658,784 $45,268 $704,052 95.1% 952 1,458 $704

Jun-2015 $19,617 $384,191 $6,649 $131,770 $542,227 $662,217 $45,503 $707,720 76.6% 957 1,462 $567

Jul-2015 $22,897 $441,113 $1,464 $143,683 $609,157 $664,397 $45,653 $710,051 85.8% 960 1,464 $635

Grand Total $260,910 $7,210,102 $72,303 $1,627,417 $9,170,732 $7,990,881 $550,602 $8,541,482 107.4% 11,408 17,614 $805

LYNXMonthly Healthcare Experience Report

Rolling 12: Paid June 2014 through May 2015

6

Year /

MonthCapitation In-Network

Out-of-

NetworkPharmacy

Total

Claims

Billed

Premium

Pooled

Premium

Total

Premium

Premium

vs. ClaimsSubs Members

Claims

PEPM

Jan-2015 $25,296 $778,057 $1,551 $84,707 $889,612 $658,414 $45,242 $703,656 126.4% 948 1,451 $938

Feb-2015 $19,282 $334,294 $11,196 $104,837 $469,610 $656,900 $45,138 $702,038 66.9% 947 1,451 $496

Mar-2015 $19,718 $483,759 $1,408 $134,393 $639,277 $666,075 $45,768 $711,843 89.8% 961 1,469 $665

Apr-2015 $23,895 $718,488 $969 $148,455 $891,808 $666,265 $45,782 $712,047 125.2% 961 1,468 $928

May-2015 $19,661 $517,481 $5,473 $127,164 $669,780 $658,784 $45,268 $704,052 95.1% 952 1,458 $704

Jun-2015 $19,617 $384,191 $6,649 $131,770 $542,227 $662,217 $45,503 $707,720 76.6% 957 1,462 $567

Jul-2015 $22,897 $441,113 $1,464 $143,683 $609,157 $664,397 $45,653 $710,051 85.8% 960 1,464 $635

Grand Total $150,367 $3,657,384 $28,710 $875,010 $4,711,471 $4,633,052 $318,354 $4,951,405 95.2% 6,686 10,223 $704

LYNXMonthly Healthcare Experience Report

Plan Year to Date: Paid January 2015 through May 2015

7

CategoryNumber of

ClaimantsTotal PY Claims Total R12 Claims

New to rolling 12 report with data paid through May 5 $166,488 $177,582

No longer on the plan 6 $445,301 $834,260

On Rolling 12 and Plan Year through July 37 $2,522,438 $3,852,153

Rolling 12 Claimants with less than $25,000 in the current plan year 27 $263,965 $1,312,995

Grand Total 75 $3,398,192 $6,176,990

LYNXLarge Claim Summary

8


FULLY INSURED AND SELF

INSURED OPTIONS


mhblake

Typewritten Text

Medical Insurance: Initial Renewal

Coinsurance

Maximum OOP (Single/Family)

PCP Visit

Specialist

Preventive Care

Urgent Care

Inpatient Hospital

Outpatient Surgical

Routine Lab & X-Ray

Complex Imaging (MRI, CT, PET)

Emergency Room

Deductible

Preventive Rx (on the list)

Retail (in-network)

Mail Order

Deductible

Coinsurance

Maximum OOP

Emergency Room

Number of Employees

Employee Only 581 $520.54 102 $607.73 13 $722.58 581 $690.81 102 $807.78 13 $961.86

Employee + Spouse 66 $1,104.19 25 $1,289.14 3 $1,532.76 66 $1,473.80 25 $1,721.92 3 $2,048.75

Employee + Child(ren) 57 $998.05 19 $1,165.23 3 $1,385.43 57 $1,331.41 19 $1,555.69 3 $1,851.10

Employee + Family 53 $1,581.73 29 $1,846.67 1 $2,195.65 53 $2,114.44 29 $2,469.86 1 $2,938.03

Monthly Plan Cost

Total Annual Cost

Annual $ Difference

Annual % Difference

Ra

tes

Percent Change by Plan

Not Covered

Not Covered

Not Covered

CYD then 20%

$226,625.61

CYD then 20%

$169,909.76

$2,450/$6,250

40%

$4,900/$12,250

CYD then 20%

Not Covered

Not Covered

Not Covered

33.05%

$11,284,254

$2,808,842

Not Covered

Not Covered

HSA

OAP-IN

Yes

All

Calendar Year (CYD)

$2,000/$4,000

20%

$4,000/$8,000

CYD then 20%

$0

CYD then 20%

CYD then 20%

$0 $0

Local Plus

Yes

All

Calendar Year (CYD)

OAP-Plus

Yes

All

Calendar Year (CYD)

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20% CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

Combined w/Med

$10/$50/$80

$25/$125/$200

CYD then 20%

Combined w/Med

$10/$50/$80

$25/$125/$200

CYD then 20%

CYD then 20%

CYD then 20%

33.14%

$8,475,412

N/A

N/A

33.42%

CYD then 20%CYD then 20%

$686,587.10

33.38%

Not Covered

Combined w/Med

$10/$50/$80

$25/$125/$200

Combined w/Med

$10/$50/$80

$25/$125/$200

HSA

OAP-IN

Yes

All

Calendar Year (CYD)

$2,000/$4,000

20%

$4,000/$8,000

Local Plus OAP-Plus

Combined w/ Med Combined w/Med

In N

etw

ork

Be

ne

fits

Rx

$10/$50/$80 $10/$50/$80

$25/$125/$200 $25/$125/$200





CYD then 20% CYD then 20%CYD then 20%

20%

$2,500/$5,000 $1,300/$2,600Deductible (Single/Family)

Notes

Location(s) All All

$516,030.82 $27,141.76

Co

st

$20,343.76

OO

N

Not Covered $2,450/$6,250

Not Covered 40%

Not Covered $4,900/$12,250

CYD then 20%

Plan Type

CYD then 20%

CYD then 20%

$0

$5,000/$10,000 $2,600/$5,200


CYD then 20%

CYD then 20%

$5,000/$10,000$2,600/$5,200

CYD then 20%

CYD then 20%

$0



CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

Open Access Yes Yes

Calendar Year (CYD) Calendar Year (CYD)

20% 20%

$1,300/$2,600

20%

$2,500/$5,000

LYNX

Medical Cost Comparison

Effective Date of Coverage: January 1, 2016

Carrier Cigna

Website www.cigna.com

Plan Name HSA HSA

Plan

HSA

Current Renewal

HSA


$0

10

Medical Insurance: Final Renewal

Coinsurance

Maximum OOP (Single/Family)

PCP Visit

Specialist

Preventive Care

Urgent Care

Inpatient Hospital

Outpatient Surgical

Routine Lab & X-Ray

Complex Imaging (MRI, CT, PET)

Emergency Room

Deductible

Preventive Rx (on the list)

Retail (in-network)

Mail Order

Deductible

Coinsurance

Maximum OOP

Emergency Room

Number of Employees

Employee Only 581 $520.54 102 $607.73 13 $722.58 581 $648.23 102 $756.81 13 $899.83

Employee + Spouse 66 $1,104.19 25 $1,289.14 3 $1,532.76 66 $1,375.05 25 $1,605.37 3 $1,908.75

Employee + Child(ren) 57 $998.05 19 $1,165.23 3 $1,385.43 57 $1,242.87 19 $1,451.06 3 $1,725.28

Employee + Family 53 $1,581.73 29 $1,846.67 1 $2,195.65 53 $1,969.73 29 $2,299.66 1 $2,734.24

Monthly Plan Cost

Total Annual Cost

Annual $ Difference

Annual % Difference

Ra

tes

Percent Change by Plan

Not Covered

Not Covered

Not Covered

CYD then 20%

$211,588.62

CYD then 20%

$169,909.76

$2,450/$6,250

40%

$4,900/$12,250

CYD then 20%

Not Covered

Not Covered

Not Covered

24.53%

$10,554,431

$2,079,019

Not Covered

Not Covered

HSA

OAP-IN

Yes

All

Calendar Year (CYD)

$2,000/$4,000

20%

$4,000/$8,000

CYD then 20%

$0

CYD then 20%

CYD then 20%

$0 $0

Local Plus

Yes

All

Calendar Year (CYD)

OAP-Plus

Yes

All

Calendar Year (CYD)

CYD then 20%

Combined w/Med

$10/$50/$80

$25/$125/$200

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%


CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

24.53%

$8,475,412

N/A

N/A

24.53%

CYD then 20%CYD then 20%

$642,613.18

24.53%

Not Covered

Combined w/Med

$10/$50/$80

$25/$125/$200

Combined w/Med

$10/$50/$80

$25/$125/$200

Combined w/Med

$10/$50/$80

$25/$125/$200

HSA

OAP-IN

Yes

All

Calendar Year (CYD)

$2,000/$4,000

20%

$4,000/$8,000

Local Plus OAP-Plus

Combined w/ Med Combined w/Med

In N

etw

ork

Be

ne

fits

Rx

$10/$50/$80 $10/$50/$80

$25/$125/$200 $25/$125/$200






20%

$2,500/$5,000 $1,300/$2,600Deductible (Single/Family)

Notes

Location(s) All All

$516,030.82 $25,334.08

Co

st

$20,343.76

OO

N

Not Covered $2,450/$6,250

Not Covered 40%

Not Covered $4,900/$12,250

CYD then 20%

Plan Type

CYD then 20%

CYD then 20%

$0

$5,000/$10,000 $2,600/$5,200


CYD then 20%

CYD then 20%

$5,000/$10,000$2,600/$5,200

CYD then 20%

CYD then 20%

$0



CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

CYD then 20%

Open Access Yes Yes

Calendar Year (CYD) Calendar Year (CYD)

20% 20%

$1,300/$2,600

20%

$2,500/$5,000

LYNX

Medical Cost Comparison

Effective Date of Coverage: January 1, 2016

Carrier Cigna

Website www.cigna.com

Plan Name HSA HSA

Plan

HSA

Current Renewal

HSA


$0

Proposed Proposed

12/12 12/36Medical & Rx Medical & Rx

952

$250,000 $250,000$39.34 $46.29

$37,452 $44,068

$4.73 $4.73$4,503 $4,503

Total Stop Loss (Specific + Aggregate)

$44.07 $51.02$41,955 $48,571

$47.95 $47.95$45,648 $45,648

$92.02 $98.97$87,603 $94,219

$1,051,236 $1,130,633

$684.06 $728.30$651,224 $693,342$738,827 $787,561

120% 120%$820.87 $873.96$781,468 $832,010$869,071 $926,229

Per Member per Month 1,457 $3.84 $3.84$5,593.19 $5,593.19

$8,933,037 $9,517,851

$10,495,974 $11,181,871

LYNX

Stop Loss ComparisonEffective Date of Coverage: 1/1/2016

Stop Loss Carrier Cigna

Rate per Employee

PlanContract TypeLines of Coverage

Total Enrollment (Employees)

Fix

ed

Co

st

Fa

cto

rs

Sto

p L

os

s

Specific (Individual) Stop Loss

DeductibleRate per EmployeeMonthly Specific PremiumAggregate Stop Loss

Rate per EmployeeMonthly Aggregate Premium

Monthly Stop Loss Premium

Ad

min Claims Administration

Rate per EmployeeMonthly Admininstration Cost

Aggregate CorridorPer Employee

Monthly Aggregate Claims

To

tal

Total Fixed Cost (Stop Loss + Claims Administration)

Rate per EmployeeMonthly Fixed Cost

Annual Fixed Cost

Total Annual Aggregate Costs

Notes

Firm Quote. Includes a Laser of $400k on a Hemophiliac claimant. Potential for another $150k in expenses on this person. In addtion Cigna's

12/15 expected costs appear unreasonably low. With the fixed cost quoted, Gallagher actuaries believe the expected cost to be closer to

$10m.

Total Monthly Aggregate Costs

HC

R

To

tal HCR Fees

Total Monthly HCR Fees

Total Annual Expected Costs

Cla

ims

Fa

cto

rs

Ex

pe

cte

d &

Ag

gre

ga

te

Expected Claims

Per EmployeeMonthly Expected ClaimsTotal Monthly Expected Costs

Aggregate Claims

12

Proposed Proposed


952

$250,000 $250,000$38.87 $45.59$37,004 $43,402

$4.97 $4.97$4,731 $4,731


$43.84 $50.56$41,736 $48,133

$47.95 $47.95$45,648 $45,648

$91.79 $98.51$87,384 $93,782

$1,048,609 $1,125,378

$739.19 $809.70$703,710 $770,834$791,095 $864,616

120% 120%$887.03 $971.64$844,453 $925,001$931,837 $1,018,783


$9,560,253 $10,442,509

$11,249,158 $12,292,512

Aggregate Corridor


Cla

ims

Fa

cto

rs

Ex

pe

cte

d &

Ag

gre

ga

te



Aggregate Claims

Total Monthly Expected Costs

Monthly Expected Claims

Expected Claims



Claims Administration

Rate per Employee


Per Employee

Sto

p L

os

sA

dm

in

Monthly Admininstration Cost


Rate per Employee

Stop Loss Carrier Sun Life

LYNX


Claims needed through August to make the quote firm. Most recent quote indicates additional claims data is needed on 7 claimants, and

will likely laser a Hemophiliac claimant and ESRD

Lines of Coverage

PlanContract Type

Monthly Aggregate Premium

Rate per EmployeeMonthly Specific Premium

Rate per Employee

Deductible

Aggregate Stop Loss



Per Employee

Annual Fixed Cost

Fix

ed

Co

st

Fa

cto

rs

To

tal

HCR Fees


HC

R

To

tal

Notes

13

Proposed Proposed


.

952

$250,000 $250,000$54.05 $61.13

$51,456 $58,196

$2.11 $2.67$2,009 $2,542


$56.16 $63.80$53,464 $60,738

$47.95 $47.95$45,648 $45,648

$104.11 $111.75$99,113 $106,386

$1,189,353 $1,276,632

$735.03 $820.14$699,750 $780,769$798,863 $887,155

125% 125%$918.79 $1,025.17$874,688 $975,962$973,801 $1,082,348


$9,653,476 $10,712,984

$11,752,728 $13,055,292

LYNX


Stop Loss Carrier AIG

Rate per Employee

PlanContract TypeLines of Coverage


Fix

ed

Co

st

Fa

cto

rs

Sto

p L

os

s


DeductibleRate per EmployeeMonthly Specific PremiumAggregate Stop Loss

Rate per EmployeeMonthly Aggregate Premium


Ad

min Claims Administration

Rate per EmployeeMonthly Admininstration Cost

Aggregate CorridorPer Employee


To

tal



Annual Fixed Cost


NotesClaims needed through August as well as additional details on 5

claimatns to make the quote firm.


HC

R

To

tal HCR Fees



Cla

ims

Fa

cto

rs

Ex

pe

cte

d &

Ag

gre

ga

te

Expected Claims

Per EmployeeMonthly Expected ClaimsTotal Monthly Expected Costs

Aggregate Claims

14


Proposal Comparison

Fully Insured$11,284,254



Self Funded$9,517,888

Self Funded$9,967,085

Initial Cigna Final Cigna Gallagher Projection

Fully Insured

Self Funded



OBSERVATIONS AND NEXT STEPS



Observations/Next Steps

• Plan design changes are having an impact

– 2015 YTD spend is $629 PEPM vs. $722 PEPM for the same time

period in 2014

– $629 for 2015 YTD vs. $774 PEPM for CY 2014

– Excluding claims over the pooling point of $250k

• LYNX continues to perform better as the year progresses

• The last six months of 2014 were all above 100% loss ratio,

with the highest being over 140%. These months are all

impacting the underwriting



Considerations

• Path 1:

– Agree to the current fully insured renewal

– Monitor claims experience in 2016 to determine 2017 funding

arrangement

– Results:

• If claims perform better than expected, LYNX will reap the rewards

in the 2017 renewal. However, the 2016 premium will be forgone.

• If claims perform worse than expected, LYNX will receive a

challenging renewal. However, LYNX will have benefited from

paying a premium amount that was less than adequate to cover

claims and administration, etc. for one year.



Considerations

• Path 2

– Transition to a self funded arrangement and fund the plan based upon

the 24.5% fully insured renewal

– Reserves will be built in the first two months of the plan as well as the

remainder of the year if claims perform well

– Results:

• If claims perform better than expected, LYNX will reap the rewards

in 2016 as well as in 2017

• If claims perform worse than expected, LYNX will immediately be

impacted



Steps to Move to Self

Insurance

• 112.08 Filing

– Requires a self funded plan offered by a public entity to maintain

surplus assets equal to at least 60 days of expenses

• Fund approximation is $1.6m in addition to runout liability

• Assets can be in the plan or in the form of unencumbered surplus

elsewhere, i.e. general funds, etc.

– Filing has to be complete in advance of implementation of the plan

– Potential for the filing to be complete with 30 days of funds with a

written plan on how the remaining 30 days will be obtained throughout

the year – there is no guarantee the state will approve this strategy

– Gallagher will file the 112.08 filing on behalf of LYNX



Steps to Move to Self

Insurance

• Banking Arrangement

– An imprest balance is needed in advance in order to have funds in place to pay for claims

– Recommended to fund on a weekly basis

– Claims are pulled daily

• Claims Reconciliation

– LYNX will reconcile the claims against what was actually deducted, Cigna will provide weekly backup as well as monthly claims reports to assist in the reconciliation

• Implement HIPAA privacy policy

• Signed ASO contracts

• Plan Document Creation



Decisions


Does LYNX transition to a self insured program for 2016?

If so, does LYNX use the fully insured renewal as the funding

amount or an amount closer to projected to assist with the assets for

the 112.08 filing?

Thank YouJoshua Rubich

Area Vice President

[email protected]

407-563-3574


Documents

LYNX Finance & Audit Committee...Sep 03, 2015 · Finance & Audit Committee Minutes Page . 4. of . 6. Bryant, and Lenny Antmann with a recommendation to award a contract to Cherry